Interest rates improved 4 of the 5 business days last week. The Mortgage Backed Security Market closed the week trading up + 22 bps. Unfortunately, the small gains of last week have been taken back with the market trading down – 27 bps on Tuesday morning.

The 2 big things in the news this week that could affect interest rates are:

SYRIA

THE AUGUST EMPLOYMENT REPORT

Last week, both John Kerry and President Obama reiterated that any action against Syria would likely not result in troops on the ground. With the White House trying to garner support for a strike against Syria, it appears something will happen at this point. The market will keep close attention and pricing will move based upon the implications of any strike on the economy.

The all important employment report is released on Friday. Pay more attention to job creation hitting their forecasts versus the unemployment percentage. This August employment report is particularly important because it is the last employment report before the FED meeting on September 18th. Strong numbers will definitely help the cause of tapering the stimulus.

LOCK RECOMMENDATION:

I still believe it is too risky to float right now especially with the Fed meeting coming up fast. Even when we have seen rate improvement over the past 2 weeks, the gains have been small. I don’t see any situation where rates will improve significantly from current levels outside of the FED announcing an extension of the stimulus.